This story was produced as part of the Colorado Capitol News Alliance. It first appeared at cpr.org.
President Donald Trump signed an executive order directing the U.S. Department of Justice to reclassify cannabis from a Schedule I narcotic to a Schedule III drug, but didn’t legalize the drug.
The move would put marijuana in the same category as Tylenol with codeine, a major step toward expanding access to cannabis and opening the door to expanding research on its potential medical benefits.
It will still be illegal under federal law to sell and purchase marijuana for recreational use. But it’s a big step toward broader acceptance of marijuana on a national scale, according to attorney Brian Vicente, one of the authors of the amendment that legalized recreational marijuana in Colorado.
“I think it would be the biggest thing to happen for Colorado's marijuana atmosphere since legalization,” Vicente said. “This is the federal government … saying, ‘Hey, we recognize marijuana is medicine and there's some legitimacy here.’”
The most immediate benefit for Colorado’s marijuana industry would be changes to the federal tax code. If the Department of Justice follows through on the executive order, it means cannabis businesses will be able to deduct operating expenses when they file their federal income taxes.
“They'd now … no longer have to pay this onerous federal tax that only applies to Schedule I controlled substances,” Vicente said. “Instead of paying a 70 or 80 percent tax rate, they go back to paying normal business taxes like 20 or 30 percent.”
Response to the executive order
Gov. Jared Polis applauded Trump’s executive order as a good first step but said he wished the federal government would go further.
“I think what Colorado needs ultimately is more of a treat marijuana like alcohol, regulated as a controlled substance, but certainly descheduling, which allows, for instance for medical uses, can be a big step in helping with the banking, helping with the sector, helping with the business tax deduction,” Polis said in an interview with CPR News.
“I'm very excited to see this move forward and hopeful that it'll have a positive impact. I mean, it's not as great a positive impact as a full federal decriminalization."
He noted that full decriminalization would take Congressional action, but he thinks reclassifying cannabis will help the industry, which has had a tough last year or two.
“And ultimately it'll have a positive benefit for consumers as well.”
In a rare moment of bipartisan unity, members of Colorado’s congressional delegation from both political parties also praised Trump’s decision. Democratic Rep. Brittany Pettersen said this is one area where she actually agrees with Trump.
“Criminalizing people for using marijuana is absolutely horrific, and we need to change those policies,” she said, noting the process was also underway during the Biden administration. “I think that that's really important for Colorado. And I think about the businesses, the cannabis industry, and making sure that it's safe and it's out of the hands of kids.”
Republican Colorado Rep. Lauren Boebert said while she does not like the direction Colorado has gone since cannabis was first legalized, regulations on banking need to be changed.
She also was open to rescheduling it “so we don’t have so many who are serving just extensive amounts of time in prison over this is a good thing.”
Still several congressional Republicans opposed the move, with more than a dozen in the Senate and two dozen in the House writing to Trump this week urging him not to reschedule the drug.
Uncharted waters for health and research
Reaction in Colorado’s health and research communities was mixed.
“Rescheduling would be dangerously premature at this time because the products on the market have become increasingly more potent and harmful,” said Diane Carlson, co-founder and national policy director of the organization One Chance to Grow Up. “This move places tax breaks for the commercial marijuana industry ahead of public health and ignores growing scientific evidence about risks to youth.”
It started in 2013 as a group of concerned parents who met after Colorado voters passed Amendment 64, which legalized marijuana use for those 21 years and older.
Carlson notes that the potency of THC, which is the ingredient in a marijuana plant that induces a high, is the strongest it has ever been.
“This is not the plant of yesteryear,” she said. “And that’s our concern.”
On its website, the group notes, the potency has tripled since the 1990s and that Dutch health experts have concluded that THC potency above 15% classifies it as a hard drug.
Colorado has mandated education about high-concentration THC. It specifically spells out that concentrated THC may lead to some serious health problems like psychotic symptoms and/or psychotic disorder, which includes delusions, hallucinations, or difficulty distinguishing reality. It can also cause what’s called Cannabis Hyperemesis Syndrome (CHS), uncontrolled and repetitive vomiting, and cannabis use disorder or dependence, including physical and psychological dependence.
The state health department has posted educational resources and information for providers on an agency webpage. It includes neurological, cognitive and mental health impacts, for adolescents and young adults, on its website.
Last year, a first-of-its-kind campaign was launched called, the Tea on THC, which aims to inform people — like the young, those who are pregnant and parents — about its health risks.
Carlson said Colorado has put in place regulations and education but she worries that may not happen at the national level.” Those guardrails aren't in place federally,” she said, urging any national changes be carefully considered and planned.
Cathy Bradley, dean of the Colorado School of Public Health, said she wished more research had been done over many years to inform policymakers before they make sweeping changes. “Are we doing the right things at the right time in the right order? Do you want to unleash a product, normalize it without understanding what it does?” she asked. “Does that make a lot of sense?”
“It's super complicated,” said Colorado School of Public Health associate professor Gregory Tung, who called for policies informed by research to thread the needle between health benefits and harms.
“With this rescheduling, you know, I think that's consistent with what we know about cannabis,” he said. “Are there legitimate therapeutic and medical uses? Absolutely. Are there legitimate recreational uses? Well, the voters of Colorado and increasingly other states say yes.”
But he notes it's not a harm-free product. “Are there harms? Absolutely,” he said.
“It is a big symbolic change,” said Ashley Brooks-Russell, an associate professor at the Colorado School of Public Health. “I think what it does is it ushers in potentially or foreshadows other changes that might have kinda more tangible consequences.”
She noted that she didn’t expect that change will impact her research of cannabis-impaired driving. “Some of the effects are going to be more felt in researchers who are studying the potential therapeutic applications of cannabis or specific formulations that might come on the scene.” They may have less paperwork involving oversight by the DEA, the U.S. Drug Enforcement Agency, she said.
She said another federal change may have even more of an impact.
Last month, Congress outlawed intoxicating hemp products over worries about health risks. It did so over industry warnings that the change would criminalize most CBD products.
Brooks-Russell said the changes to the Farm Bill to close a loophole related to hemp “is far more impactful for protecting children” than the rescheduling of cannabis “I think that's been understated how big of an impact that is.”
What happens with Colorado businesses?
Colorado became the first state to sell licensed recreational marijuana in 2014, giving rise to a brand new economic ecosystem of growers, dispensaries and consumers. In the first four years following legalization, Colorado issued roughly 38,000 occupational licenses for marijuana businesses, according to the Federal Reserve Bank of Kansas City.
Since then, 23 other states have legalized recreational marijuana.
“I'm assuming that our model will stay the same in Colorado,” said Ryan Hunter, chief revenue officer of Aurora-based cannabis brand Spherex. “You'll still have dedicated cannabis dispensaries … Doctors now, though, will be much more likely to prescribe cannabis as a Schedule III substance rather than a Schedule I substance. And I would imagine too, there's a segment of consumers who feel like, OK, it's now legal for me to consume this medication, where before they're relying on predominantly opioids, let's say for pain relief.”
The change to the tax code would save Spherex millions of dollars per year, Hunter said.
“It would make us more profitable overnight,” Hunter said. “We still need Congress to act to deschedule cannabis completely. But I do think this is a massive step forward for us.”
The tax break would be a major boon at a time when cannabis sales are declining in Colorado, due in part to competition from other states and online sales of hemp products.
This is a developing story.
